Got that payday feeling? Yaass! But before you splurge, read this:
1 Check your budget
Before you start swiping like you’re Rihanna, check your budget for the month. Take note of what your upcoming expenses will be before next payday, and set this money aside so it doesn’t get spent.
Don’t have a budget? Everything you need to know to create – including downloadable spreadsheet templates – is here.
According to Barbara Mundell, a technical specialist at the Financial Planning Institute, ‘Our recommendation is that you have a look at your budget on the day you get paid, it gives you a realistic picture of how far your money still has to go until next pay day.’
You should also use this time to see if your budget is sufficient. How successfully did you stick to it last month? Make adjustments – including adjustments to how much you’ll spend this coming month – if need be. Remember: a budget is pointless if you aren’t sticking to it.
2 Take stock of your debit orders
You don’t want to have services suspended, or incur penalty fees, because your upcoming debit orders bounced. Remind yourself of what these are – now make sure you leave enough in your account to service these.
‘Paying off debt is more important than accruing savings’
3 Check your debt
According to Sylvia Walker, a financial planner, servicing your debt should be a priority: ‘If you’ve got a home loan, pay it before the first because interest gets calculated on the first, so you can save a little bit of interest by paying before then.’ Paying off debt before the 1st of each month can save you on interest for everything from your credit card to your home loans.
Plus, make sure you’re paying at least the minimum repayments required for your debts, from your car to your credit card. Ensure you leave enough cash in your account for this and, if you can, pay in more than the minimum amounts. The amount you’ll save on interest can be huge. Most financial planners agree that paying off debt is more important than accruing savings. So make this a priority before you spend this month.
4 Are you on track for your savings goals?
Now that you’ve done steps 1-3, it’s time to make sure you’re saving enough. Ideally, you should see an independent financial planner to set up your savings goals, but as a rough guide:
- You should be saving towards retirement. The amount will depend on your salary and your age, but the sooner you start saving, the better.
- You should be saving towards a three-month ‘rainy day’ fund, in a Money Market account or similar. These accounts earn you better interest than a standard savings account, but you can access the cash quickly if you need to. This fund is to help if you get whacked with an unexpected bill, or if you lose your job unexpectedly.
- Any other savings goals you have, say, saving for studies or a holiday.
Now that you’ve stashed away enough…
5 Reward yourself
Says Mundell: ‘If there is an option for it, spend a little bit on yourself (in budget) so that your gratification level doesn’t go down and you don’t grow resentful of your savings.’
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